India has 20 days to avoid 50% Trump tariffs - what are its options?

August 7, 2025

The United States has significantly escalated economic pressure on India by doubling tariffs to 50% in response to India's continued purchase of Russian oil amid the Ukraine war. Donald Trump's administration aims to reduce Russia's oil revenues and force Putin into a ceasefire, making India the most heavily taxed US trading partner in Asia. This action threatens to severely impact India's $86.

Who is affected

Indian exporters, particularly in labor-intensive sectors like textiles and gems and jewelry
Indian workers in export-oriented industries
Indian economy overall, with potential GDP reduction of 0.2-0.4%
US consumers who purchase Indian goods
Russia, as the tariffs aim to reduce its oil revenue
Prime Minister Narendra Modi's government facing a significant foreign policy challenge

What action is being taken

The US is doubling tariffs on India from 25% to 50%, set to take effect on August 27
The Indian government is stating it will "take all actions necessary to protect its national interests"
Trade talks between the US and India are continuing, with a US team scheduled to visit India in August
India is maintaining its purchase of Russian oil, citing market factors and energy security needs
Prime Minister Modi is preparing to visit China for the Shanghai Cooperation Organisation summit

Why it matters

India is the US's largest trading partner in Asia, with $86.5 billion in annual goods exports to the US (18% of India's exports and 2.2% of GDP)
Most Indian exporters cannot absorb more than a 10-15% tariff increase, making a 50% rate potentially devastating
The tariffs could function as a de facto trade embargo on affected products
This represents a significant test for US-India strategic relations at a time when the US has been courting India as a counterweight to China
The situation could potentially push India to strengthen ties with Russia, China, and other countries
India's appeal as a "China-plus-one" manufacturing destination could be damaged

What's next

The new tariff rate will come into effect in 21 days (August 27)
Trade talks between the US and India are scheduled for August
Prime Minister Modi will visit China for the Shanghai Cooperation Organisation summit
Experts will be watching whether India offers concessions in protected sectors like agriculture and dairy
The Indian government's support measures for affected exporters will be closely monitored

Read full article from source: BBC